The JSE closed weaker on Friday, tracking its global peers as comments by US Federal Reserve officials led to a sell-off in technology stocks.
In addition to prospects of a first rate hike in March, Fed officials have delivered some hawkish testimony before Congress this week, as higher energy costs and supply-chain disruptions stoke price pressures in the world’s largest economy.
Data on Thursday showed US producer inflation had moderated in December, but had still risen 9.7% year on year in 2021, the highest since 2010, when records began. This follows data on Wednesday that showed consumer inflation reached 7% year on year in December, its highest level since 1982.
One official said that three interest-rate increases this year was a “good baseline” and there may be fewer or even as many as five moves, while other officials joined the widespread calls for higher interest rates this year.
Technology stocks — seen as most sensitive to higher rates — were hit the most.
“Big Tech stocks are selling off so dramatically as a product of, ‘yes US rates are likely to go up further this year’," said Oanda senior analyst Jeffrey Halley. “A recent chorus of Fed speakers that have said they are open to raising interest rates in March, which means the possibility of four rate hikes this year is growing.”
Naspers closed 1.42% weaker at R2,606.43, while Prosus fell 1.19% to R1,363.35.
“With the earnings season arriving just in time, some knockout tech earnings may be enough to tempt the dip buyers back in. But given the level of interest rate anxiety in the markets right now and the sensitivity of tech stocks to it, good news with the earnings will be appreciated.” Halley said.
The JSE all share lost 1.01% to 75,160 points and the top 40 1.07%. Precious metals fell 2.64%, resources 1.48%, industrial metals 1.19%, industrials 0.91%, retailers 0.56%.
At 5.35pm, the Dow Jones Industrial Average was 0.73% weaker at 35,851 points. Markets were also weaker in Europe and Asia.
At 5.28pm, the rand had strengthened 0.45% to R15.3425/$, 0.67% to R17.5282/€ and 0.58% to R20.9881/£. The euro was 0.26% firmer at $1.1424.
Gold was little changed at $1,821.76/oz, while platinum gained 1.11% to $983. Brent crude was 1.57% firmer at $85.38 a barrel.
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